I recently read an interesting article on Seeking Alpha that lower oil prices discourage energy companies to invest in exploration and refining. This results in an increased spread between crude oil and derivative products (i.e. petrol at the pump will not go down further, because of lack of refining capacity), but it will also run the risk (or opportunity) of a rapid spike as soon as the economy shows the slightest sign of recovery, since the drilling capacity is not there when we actually need it.
So should we invest in oil? If so, when? Where is the bottom?
So here I appreciate some thoughts. I looked at the crude oil graph (from IGIndex, which are spread betting prices rather that official NYMEX ones, but that is close enough), and noticed that since slide set in, the price has not been able to recover above a psycholigical barrier once it broke it. When it broke below 100 it briefly recovered, but then never recovered from 90, 80, 70, 60, 50, and who knows 40.
So would it be fair to say that a recovery above 50, or maybe in a few weeks above 40 is a buy signal?
So should we invest in oil? If so, when? Where is the bottom?
So here I appreciate some thoughts. I looked at the crude oil graph (from IGIndex, which are spread betting prices rather that official NYMEX ones, but that is close enough), and noticed that since slide set in, the price has not been able to recover above a psycholigical barrier once it broke it. When it broke below 100 it briefly recovered, but then never recovered from 90, 80, 70, 60, 50, and who knows 40.
So would it be fair to say that a recovery above 50, or maybe in a few weeks above 40 is a buy signal?
